Paper-Based vs. Computerized Accounts Payable Control Systems
Regardless of their trade, most businesses must purchase goods or equipment before they can earn a profit. An accounts payable control system is the organization mechanism that a business uses to manage and pay off the debts it incurs through these purchases. All accounts payable control systems are either paper-based or computerized.
Other People Are Reading
-
Paper-Based Systems
-
A paper-based accounts payable control system uses only paper documents. When a supplier sends an invoice to a company with a paper-based system, an employee of the company must manually check the invoice number to ensure that no duplicate exists. The employee must also manually verify all of the information included on the invoice, such as the price of the purchase. Finally, the employee must send a check to the supplier and manually file the invoice and check stub.
Computerized Systems
-
A computerized accounts payable control system serves the same purpose as a paper-based system, but it uses electronic files instead of paper documents. Companies with computerized systems may receive invoices electronically, or they may receive paper invoices and manually enter them into the computer. An employee then uses the computer system to check for duplicates, verify the price and quantity of the products received, issue a check to the supplier and file the invoice.
-
Comparisons
-
Both the paper-based and computerized accounts payable control systems involve the same procedures of validating and paying invoices. However, the computerized system is typically more accurate and efficient than the paper-based system. Because the system is computerized, it involves less capacity for human error. The computerized system also requires less time and fewer resources to implement. On the other hand, the paper-based system involves fewer start-up expenses because the company doesn't need to purchase a computer or accounting software.
Considerations
-
Paper-based accounts payable systems also require more storage space, such as filing cabinets, because companies must keep a larger volume of paper documents. Although a computerized accounts payable control system requires a company to purchase a computer system and accessories, the company may be able to deduct the expense on its income taxes. In most cases, the Internal Revenue Service requires the company to spread the deductions over several years.
-
